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Polypropylene19-Apr-2024
DUBAI (ICIS)–Importers in the Middle East are
being hit by surging costs of transporting
goods by land through Saudi Arabia from the
Jebel Ali port in the UAE a shipping crisis in
the Red Sea to the west of the region.
Increased demand meets truck shortage
Polymer market activity slow to pick up
after Eid holidays
Logistics woes may spill into Strait of
Hormuz as tensions escalate
Buyers in Jordan, Syria and Israel have been
relying more on this route to take cargoes
coming in from elsewhere in the world.
Most shipping companies avoid the Red Sea
fearing attacks on commercial vessels by
Yemen’s Houthi militants since late last year
following the outbreak of the Israel-Hamas war.
GCC suppliers are the main exporters of PP and
PE to the East Mediterranean region and have
been selling most of the material through truck
via Saudi Arabia, with limited quantities sold
via the CFR (cost & freight) Aqba route.
The Red Sea, which has the Suez Canal in the
north, offers the shortest route between Asia
and Europe and shipping access to the East
Mediterranean markets.
From the Jebel Ali port in Dubai to Jordan,
land freight has more than doubled in recent
months, a Jordanian trader said.
”We’ve seen jumps from $60-70/tonne [trucking]
cost from Jebel Ali, to Jordan, via Saudi
Arabia, to … as high as $150/tonne when
ordering non-prime material for both PP and PE
from a major UAE-based supplier,” the
trader said.
The Middle East observed the Muslim fasting
month of Ramadan from 10 March, during which
working hours were reduced, culminating with
the Eid ul-Fitr holiday during the second week
of April.
“Now that we are back from Eid, the
expectations are towards some decreases in the
[land freight] costs,” the trader said.
In March, the spike in freight cost was due
shortage of trucks following a sharp spike in
demand to transport essential goods by land for
Israel from Jebel Ali via Saudi Arabia.
This shortage was exacerbated by Saudi Arabia’s
existing ban on trucks older than 20 years from
transiting through its territories, which came
into effect in 2023.
Trucking demand for polymer cargoes from Oman
and the UAE to Egypt via Saudi Arabia also
increased, causing a sharp increase in freight
cost.
“The cost of [transporting] polymers by truck
to Egypt was around $80-100/tonne before March,
but it increased to $120-140/tonne ahead of
Ramadan Season,” a regional trader said.
Saudi Arabia’s own cost of transporting polymer
cargoes, however, was not affected, market
players said, despite a lot of trucks mobilized
since the beginning of the year to transport
material inland from plants located on the west
coast to ports situated on the east coast, so
be able to ship them to customers in Asia.
Overall polymer market activity has yet to pick
up as the Gulf Cooperation Council (GCC), East
Mediterranean, and North African markets are
just returning from the Eid holiday.
Concerns are now shifting toward repercussions
of a potential full-on war between Iran and
Israel, which could further impact logistics in
the region, specifically in the Strait of
Hormuz, which could cause oil and feedstock
prices to soar.
Explosions in Iran, Syria and Iraq were
reported early on Friday, causing oil prices to
surge
by more than $3/barrel in early trade, with
Brent crude breaching $90/barrel before easing
down.
According to media reports, Israel was behind
the explosions in Iran.
The Strait of Hormuz, which connects the Gulf
of Oman and the Persian Gulf, is bordered by
Iran, Oman and the UAE. It is an important
chokepoint for energy trades from the Middle
East.
On 13 April, Iran’s Revolutionary Guards seized
Portuguese-flagged container ship MSC Aries in
the key shipping lane which Tehran says is
linked to Israel.
On the same day, Iran had launched drones and
missiles on Israel, which it blames for a fatal
attack on an Iranian diplomatic facility in
Damascus that killed a high-ranking member of
Iran’s Islamic Revolutionary Guards and eight
other officers.
Focus article by Nadim
Salamoun and Pearl
Bantillo
Click here to read the
ICIS LOGISTICS topic page, which examines the
impact of shipping disruptions on oil, gas,
fertilizer and chemical markets.
Crude Oil19-Apr-2024
SINGAPORE (ICIS)–Shares of petrochemical
companies in Asia slumped on Friday, while oil
prices surged amid escalating tensions in the
Middle East following reported explosions in
Iran, Syria and Iraq.
Japan’s Nikkei 225 falls 2.66% at close of
trade
Brent crude briefly crosses $90/bbl; oil
eases off highs
Israel behind Iran explosions – reports
At 07:24 GMT, Asahi Kasei Corp and Mitsui
Chemicals were down by 1.31% and 1.98%,
respectively, in Tokyo, as Japan’s benchmark
Nikkei 225 shed 2.66% to close at 37,068.35.
In Seoul, LG Chem fell 2.11% as South Korea’s
KOSPI composite fell by 1.63% to 2,591.86.
Hong Kong’s Hang Seng Index slipped by 0.98% to
16,226.07.
In southeast Asia, PETRONAS Chemicals Group
(PCG) slipped by 0.44% while Siam Cement Group
(SCG) was down 2.69%.
High oil prices will continue to squeeze
margins of petrochemical producers, which are
struggling with poor demand and overcapacity.
Middle East markets in Saudi Arabia, Kuwait,
Bahrain, and Qatar could mirror the movement in
Asia when they open on 21 April. Regional
bourses are closed on Fridays and Saturdays.
Oil prices pared earlier gains in the afternoon
trade in Asia after surging by more than
$3/barrel earlier in the session, following
reports by various media outlets in the Middle
East of explosions in Iran, Syria, and Iraq.
“If these reports turn out to be true, fears
over further escalation will only grow, as well
as concerns that we are potentially moving
closer towards a situation where oil supply
risks lead to actual supply disruptions,” said
Dutch banking and financial information
services provider ING in a note on Friday.
Overnight, oil prices settled mixed following a
sell-off early in the week as financial markets
discounted fears of a war between Israel and
Iran that could disrupt crude supplies.
Explosions were heard around the central city
of Isfahan early on Friday, Iranian media
reported, adding that three drones were
destroyed after the country’s air defense
systems were activated.
Isfahan houses a significant military airbase,
and the province is host to numerous Iranian
nuclear facilities, among them the city of
Natanz, which is central to Iran’s uranium
enrichment efforts.
Iran’s state-run Press TV in a report said that
“important facilities in the Isfahan province,
especially nuclear facilities, are completely
safe and no accidents have been reported”.
Iran initially closed its airports in Tehran,
Shiraz and Isfahan after the attack but has
since re-opened them.
“Normal operations have resumed for flights at
Iranian airports including Imam Khomeini
International Airport and Mehrabad
International Airport in Tehran after temporary
delays,” Press TV said, citing the Iran
Airports and Air Navigation Co.
Elsewhere, Iran’s official IRNA news agency
said a series of explosions in Syria targeted
military sites.
In Iraq, meanwhile, explosions were reported in
the al-Imam area of Babel.
The reports have sparked worry that Israel has
retaliated against Iran’s drone attacks last
week.
Iran launched the strikes on 13 April in
response to a suspected Israeli airstrike on
Iran’s consulate in Syria at the start of the
month.
Prior to the news of Friday’s attacks, Iran’s
Foreign Minister Hossein Amir-Abdollahian
issued a warning during an interview with US
broadcaster CNN on Thursday that Iran would
respond “immediately and with maximum
intensity” to any Israeli aggression.
Focus article by Nurluqman
Suratman
Additional reporting by Nadim Salamoun
Crude Oil19-Apr-2024
SINGAPORE (ICIS)–Oil prices surged by more
than $3/barrel in Asian morning trade on
Friday, with Brent crude crossing above
$90/barrel before easing midday, amid
heightened fears of supply disruption following
unofficial reports of explosions in the Middle
East.
($/barrel)
Contract
Low
High
Open
Last (at 03:17 GMT)
Previous Settlement
Change
High Change
Brent
June
86.85
90.75
87.04
89.42
87.11
2.31
3.64
WTI
May
82.47
86.28
82.62
84.76
82.73
2.03
3.55
“If these reports turn out to be true, fears
over further escalation will only grow, as well
as concerns that we are potentially moving
closer towards a situation where oil supply
risks lead to actual supply disruptions,” said
Dutch banking and financial information
services provider ING in a note on Friday.
Overnight, oil prices settled mixed following a
sell-off early in the week as financial markets
discounted fears of a war between Israel and
Iran that could disrupt crude supplies.
On Friday, various media outlets in the Middle
East reported explosions occurred in Iran,
Syria, and Iraq.
Israel has launched a missile attack against a
site in Iran, according to US broadcaster ABC
News, while Iran’s semi-official Fars news
agency has reported explosions in Isfahan
province with state television reporting
flights in several cities have been suspended.
Isfahan houses a significant military airbase,
and the province is host to numerous Iranian
nuclear facilities, among them the city of
Natanz, which is central to Iran’s uranium
enrichment efforts.
Iran’s official IRNA news agency said a series
of explosions in Syria targeted military sites.
In Iraq, meanwhile, explosions were reported in
the al-Imam area of Babel.
The reports have sparked worry that Israel has
retaliated against Iran’s drone attacks last
week.
Iran launched the strikes on 13 April in
response to a suspected Israeli airstrike on
Iran’s consulate in Syria at the start of the
month.
Prior to the news of Friday’s attacks, Iran’s
Foreign Minister Hossein Amir-Abdollahian
issued a warning during a interview with US
broadcaster CNN on Thursday that Iran would
respond “immediately and with maximum
intensity” to any Israeli aggression.
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Gas19-Apr-2024
SINGAPORE (ICIS)–Two US officials confirmed to
BBC
News and partner CBS News in the US that an
Israeli missile hit Iran on 19 April.
Benchmark Brent crude oil has jumped more than
3% to around $90.60 a barrel as reports
filtered out of a strike.
Iran or Israel have not reported any attacks
via official websites.
The official Iran FARS news agency in Iran said
that air defence systems have been activated in
response.
Commercial flights in the Gulf region have been
diverted and suspended for Emirates Airlines,
according to notices, and over Iranian cities,
including Isfahan where explosions this morning
were reported by Iranian media.
Ammonia18-Apr-2024
SAO PAULO (ICIS)–Petrobras is to restart its
large-scale ANSA fertilizers plant in
Araucaria, state of Parana, which has been idle
since 2020, the Brazilian state-owned energy
major said late on Wednesday.
The company did not disclose the date it
intends to restart production but said as soon
as “next week” technicians would work at the
site to establish what repair or upgrading work
is necessary to restart the facilities.
The facilities are called Araucaria
Nitrogenados SA (ANSA), a wholly owned
Petorbras subsidiary. They are located next to
Petrobras’ Presidente Getulio Vargas Refinery
(REPAR).
Production capacities stand at 720,000
tonnes/year of urea, 475,000 tonnes/year of
ammonia, and 450,000 cubic meters/year of the
so-called ARLA urea, an additive added to
diesel engines to reduce the emission of
polluting gases.
“In view of the review of the company’s
strategic guidelines approved last year,
investment in fertilizers production is once
again part of Petrobras’ portfolio,” said the
company.
Petrobras new CEO, Jean Paul Prates, was
appointed by President Luiz Inacio Lula da
Silva in January 2023, when he started his
term. Unlike the prior Administration, Lula
wants Petrobras to play a more active role in
the economy.
Lula has repeatedly said Brazil needs to
increase fertilizers production to lessen its
dependence on imports – the country’s trade
deficit in fertilizers is large as its
agricultural output has become on of the
largest in the world. Agriculture is now a
quarter of Brazil’s economy.
Moreover, the significant producer of
fertilizers in the country, Unigel, has
paused production on
two large-scale fertilizers plant due to high
natural costs while it negotiates with its
creditors a debt
restructuring.
The two plants were a 10-year lease from
Petrobras signed in 2019.
Meanwhile, Unigel and Petrobras have been
involved in negotiations to help the former
restart its plants, but an agreement signed in
December is now
under scrutiny. All in all, the two plants
remain idle.
This week, Petrobras said its “re-entry” into
the fertilizers sector would first focus on
“assets that already belong” to it.
Front page picture: Petrobras’ facilities
in Aracaura, state of Parana
Source: Petrobras
Polyethylene Terephthalate18-Apr-2024
SINGAPORE (ICIS)–Buying activities in the Asia
and Middle East polyethylene terephthalate
(PET) markets remained relatively need-based,
with factors like geopolitical tensions and
uncertainties in freight rates clouding
sentiment.
Asian market sentiment mixed, PET tracks
upstream closely
Uncertainty around freight rates leads to
need-based buying
Mideast buyers’ inventories high, but some
replenishment expected post-Eid break
In this chemical podcast, ICIS editors Damini
Dabholkar and Zachary Tia discuss recent market
conditions with an outlook ahead in Asia and
the Middle East.
ICIS will be at the Chinaplas conference in
Shanghai from 23-26 April. Please get in
touch with our team there for more discussion
on the PET market.
Crude Oil18-Apr-2024
SINGAPORE (ICIS)–Oil prices rose on Thursday,
reversing sharp losses in the previous session,
after the US re-instated oil sanctions on
Venezuela, and amid discussions by the EU about
implementing new restrictions on Iran.
EU leaders mull fresh sanctions against
Iran at Brussels summit
Market uncertainty tied to potential
Israeli response to Iran
Poor economic data from China cap crude
gains
Product ($/barrel)
Latest (at 04:27 GMT)
Previous
Change
Brent June
87.57
87.29
0.28
WTI May
82.87
82.69
0.18
Both crude benchmarks
fell overnight by nearly $3/barrel on
demand concerns, with the US showing a
higher-than-expected build in crude
inventories.
The US on 17 April announced it would not renew
a license expiring on Thursday which had
previously eased sanctions on Venezuelan oil,
opting to re-instate punitive measures due to
President Nicolas Maduro’s failure to fulfill
his election commitments.
The US’ six-month sanctions relief for
Venezuela took effect on 18 October 2023.
Meanwhile, EU leaders are in Brussels, Belgium
for a two-day summit (17-18 April) to discuss
intensifying sanctions against Iran following
Tehran’s missile and drone attack on Israel
on 13 April, an incident that prompted global
powers to attempt averting a broader Middle
Eastern conflict.
“We have to adjust, to expand them [the
sanctions] on Iran,” French President Emmanuel
Macron said in Brussels ahead of the summit.
“We are in favor of sanctions that can also
target all those who help manufacture drones
and missiles that were used in the attacks last
Saturday and Sunday [13-14 April].”
Israel has indicated its intention to
retaliate, although it has not specified the
means of response.
Iran and Venezuela, which are among the
founding members of oil cartel OPEC, have
substantial oil reserves, with Iran having the
world’s fourth-largest proven oil reserves and
Venezuela holding the largest.
Despite their influence on global oil prices,
international sanctions have curtailed their
production and export capabilities and market
impact.
“The lack of direction in the market reflects
the significant uncertainty about Israel’s
possible response to Iran’s attack over the
weekend,” Dutch banking and financial
information services provider ING said in a
note.
“However, for oil, sanctions are already in
place, the issue is that they have not been
strictly enforced for the last couple of years.
And the big question is whether they will be
enforced more rigorously now,” it said.
Keeping a lid on prices was poor March economic
data from China, the world’s second-biggest
economy.
Chinese exports in
March fell by 7.5% year on year, the
biggest fall since August last year.
March retail sales and industrial output also
missed expectations, heightening concerns of
muted demand from the world’s largest crude
importer.
The US, on the other hand, showed improved in
economic activity from late February to early
April, with firms indicating expectations for
steady inflation pressures, based on a Federal
Reserve survey released on 17 April.
The Federal Reserve is currently not
considering interest rate cuts in the near term
due to a combination of resilient economic
activity and persistently high inflation.
In March, US employers added more than 300,000
jobs – the most in nearly a year – and retail
sales exceeded expectations after expanding by
0.7% month on month.
Focus article by Nurluqman
Suratman
An oil tanker at the dock of the El Palito
oil refinery at Puerto Cabello, Carabobo,
Venezuela – 13 March 2022. (Juan Carlos
Hernandez/ZUMA Press Wire/Shutterstock)
Ethylene17-Apr-2024
SAO PAULO (ICIS)–US manufacturers were
“uniformly optimistic” in March about the
prospects for the next 12 months on expected
higher sales, the country’s Federal Reserve
(Fed) Beige Book said on Wednesday.
The Beige Book is a summary of US economic
activity during the past six weeks among the 12
districts, one of which is the Federal Reserve
Bank of Dallas. That bank includes all of Texas
and northern Louisiana, the home of many
petrochemical plants and refineries.
The Beige Book published on Wednesday contains
survey responses collected in the six week to 8
April.
US manufacturing activity was in the doldrums
in 2023 and beginning of 2024, but the
manufacturing PMI index for March showed
activity expanding
for the first time in 17 months.
Earlier this week, official data from the Fed
showed manufacturing output expanding 0.5% in
March.
Increased recent demand may have been one of
the reasons for manufacturers to feel
reasonably optimistic for the months ahead.
“Contacts were uniformly optimistic for the
remainder of 2024, projecting steady to
moderately higher sales moving forward; in one
case, however, that still meant that total
sales in 2024 would fall short of their 2023
levels,” said the Fed.
“The positive forecasts were based largely on
firms’ own recent demand trends, although one
contact cited the prospects of productivity
gains from AI and expected cuts in the federal
funds rate as additional sources of optimism.”
For the six weeks covered in the report,
overall US manufacturing revenues were
practically unchanged, with half of respondents
reporting moderate gains in sales over the
cycle and the other half experiencing moderate
losses.
In the Dallas district – the 11th District in
the Fed’s terminology – the economy expanded
modestly, propped by services and housing.
However, the district’s manufacturing output
“declined slightly”, with job creation slowing.
“Employment growth slowed as wages, input
costs, and selling prices grew at a moderate
pace. Overall, Texas firms noted an uptick in
uncertainty,” said the Fed.
OVERALL, STEADY
The overall US economic continued expanding in
the six weeks to 8 April, with 10 out of 12
districts experiencing “either slight or
modest” economic growth, up from eight in the
previous report.
Some downside economic risks remain, however,
with labor shortages still being mentioned,
although with the expectation that over the
course of the next 12 months a more balance
labor market could emerge.
“On balance, contacts expected that labor
demand and supply would remain relatively
stable, with modest further job gains and
continued moderation of wage growth back to
pre-pandemic levels,” said the Fed.
Price increases were practically unchanged from
the last report, with logistics disruptions in
the Red Sea and the collapse of Baltimore’s Key
Bridge not leading yet to a significant
increase in costs, despite some shipping
delays.
“Another frequent comment was that firms’
ability to pass cost increases on to consumers
had weakened considerably in recent months,
resulting in smaller profit margins. Inflation
also caused strain at nonprofit entities,
resulting in service reductions in some cases,”
concluded the Fed.
“On balance, contacts expected that inflation
would hold steady at a slow pace moving
forward. At the same time, contacts in a few
districts – mostly manufacturers – perceived
upside risks to near-term inflation in both
input prices and output prices.”
Thumbnail image shows an ExxonMobil plant
in Beaumont, Texas. Photo courtesy of
ExxonMobil
Crude Oil17-Apr-2024
LONDON (ICIS)–Eloise Radley, Energy Market
Reporter, and Ignacio Sotolongo, Senior Editor
at ICIS, sit down to discuss how geopolitics
have impacted US oil production in recent years
and how things could change if we see a new
administration in November.
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